6% retail inflation likely, pulses set to pinch pockets

India’s shortage of lentils, along with a decline in food production, poses risks to inflation, which could rise to 6% in the current fiscal, the government’s Mid-Year Economic Analysis has said. At that level, prices would be slightly above what is acceptable for the government.

India’s shortage of lentils poses risks to inflation, which could rise to 6% in the current fiscal, the government’s Mid-Year Economic Analysis has said. .(REUTERS Photo)

India’s shortage of lentils, along with a decline in food production, poses risks to inflation, which could rise to 6% in the current fiscal, the government’s Mid-Year Economic Analysis has said. At that level, prices would be slightly above what is acceptable for the government.

The review has flagged concerns about how pulses output has barely risen, roiling household budgets and inflation targets.

“While cereals production has picked up over the years with assured procurement of wheat and paddy, pulses continue to be a major problem in India with frequent bouts of inflationary spikes owing to demand-supply mismatches and limited international supply response notwithstanding the rise in minimum support prices,” the review states.

For instance, pulses output has remained almost stagnant within the range of 13 to19 million tonnes in the last 10 years. In fact, the availability of pulses — the only source of protein for vast majority of vegetarian diets of ordinary Indians — has come down steadily. According to the review, “the per capita net availability of pulses has declined from 69 grams/day in 1961 to 35 grams/day by 2010.” This means India had a much better output of pulses in the immediate aftermath and the beginning of the Green Revolution, a period when farm output shot up due to several policy measures and better crop varieties.

In fact, in 2015, agriculture has hit a very rough patch, affecting food production and hurting rural incomes. “During the kharif season, the out of cereals and pulses again contracted by 1.8% and 1.1% respectively, while oilseeds grew by 8.5%.”

India’s shortfall of pulses needs to be corrected if retail prices are to remain within acceptable bounds, for which the economic review suggested a three-pronged strategy focussing on yield, insurance and price, abbreviated as “YIP”.

“Better seed varieties are need”, the report said, “which will need a scientific breakthrough. Generating awareness about insurance among farmers has to be of highest priority. Timely announcement of MSP (minimum support price) is essential to give greater incentives and encourage farmers to grow pulses, while also preventing price shocks in the retail markets.”